Your Business needs Cash Flow, but You have Poor Credit…Now What?

Accounts Receivable Financing


Many business owners go through the struggle of having a sufficient amount of working capital to keep their company up and running. The typical solution to this problem is taking out a bank loan to support their company through the rough patch. But what are the options when they have a limited or challenged credit history? While banks can be an aid to businesses, having credit issues will most likely result in being turned down for the loan.

The Good News

The good news is that there’s an alternative solution know as Accounts Receivable Financing. AR Financing takes a business’s existing invoices and uses them as collateral to provide a working capital line of credit. This allows the business to receive immediate cash flow from their own assets, without having to wait for payback from their clients. Businesses typically receive 70%-90% of the invoice upfront, then receive the remainder once their client pays, minus a pre-agreed fee. Since the business track records and debt profile of the client (the account debtor) is heavily weighed in the underwriting process, personal credit score or balance sheet strength is not a determining factor. Many AR Financing companies also provide third party services, such as collections, payment processing, account management, and underwriting, that are an added advantage for using their services.

Cash Flow Growth equals Business Growth

Overall, there are many benefits to Accounts Receivable Financing for businesses both with and without credit issues. The fast funding and quick application process allows for immediate cash flow in a time of need. This will eliminate a business’s everyday cash flow problems, such as being able to make payroll. Unlike a loan, a business uses their own assets for funding, so there is no debt added to their balance sheet. Also, having accessible working capital gives them the ability to grow their business.

 

Learn more about how Accounts Receivable Financing can benefit your company’s cash flow, contact SouthStar Capital today!

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